NLRB’s $21 million settlement reminds us why working people need strong unions and robust labor law enforcement

On October 30, the National Labor Relations Board (NLRB) announced that it had reached a $21.6 million settlement with VIUSA, Inc. and the Teamsters Local 89. Established in 1935, the National Labor Relations Board is an independent federal agency that protects the right of private sector employees to join together, with or without a union, to improve their wages, benefits and working conditions. The NLRB conducts hundreds of union elections and investigates thousands of unfair labor practice charges each year.

In this case, workers who are represented by the Teamsters have been working at Ford’s assembly plant in Louisville, Kentucky since about 1952. Recently, Ford had awarded a contract to Auto Handling, Inc. to perform the vehicle processing and inventory management services at the plant. Auto Handling, and all of its predecessor employers, had employed the workers represented by the Teamsters and negotiated collective-bargaining agreements with the union. When Auto Handling’s contract with Ford ended in 2012, VIUSA won the new contract. But VIUSA sought to pay wages far below what Auto Handling had paid to its Teamsters-represented employees. VIUSA refused to hire any of the Teamsters workers who had submitted applications to keep their jobs, and instead hired a staffing agency (Aerotek, Inc.) to find other workers to fill these jobs, at lower wages.

Federal law protects unionized workers during the tumultuous times when the company they work for changes owners. As the Supreme Court has stated, “during a transition between employers, a union is in a peculiarly vulnerable position.” Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 40 (1987). The law states that if the new employer maintains generally the same business and hires a majority of its employees from the predecessor employer, then it must recognize and bargain with the employees’ union. This makes sense, the Court explained, “when one considers that the employer intends to take advantage of the trained work force of its predecessor.” The Court has also stated, however, that a successor employer is not required to hire the employees of its predecessor, subject to the bedrock rule of labor law that it cannot discriminate against union employees in its hiring practices. This is an important rule because, as the Court explained, “with the wide variety of corporate transformations possible, an employer could use a successor enterprise as a way of getting rid of a labor contract.”

Here, the Board found, among other things, that VIUSA attempted to avoid the union by refusing to hire Teamsters-represented applicants who previously worked for its predecessor. Pursuant to the settlement agreement, VIUSA has agreed to pay $21.6 million; the NLRB will distribute approximately $14.4 million, as backpay, to about 257 former employees and individuals that VIUSA refused to hire because of their union affiliation. The remainder, approximately $7.2 million, will be distributed to the Teamsters Central States Pension Fund as compensation for VIUSA’s failure to make benefit contributions.

This case highlights a key reason pay has stagnated for so many workers in America: the decline of union density. VIUSA sought to undercut the employees’ union in order to pay its workers less. Working people in unions use their power in numbers to secure a fairer share of the income they create. On average, a worker covered by a union contract earns 13.2 percent more in wages than a peer with similar education, occupation, and experience in a nonunionized workplace in the same sector. Higher union density also helps the pay of non-unionized workers—as an economic sector becomes more unionized, nonunion employers pay more to retain qualified workers. Accordingly, the private-sector union decline since the late 1970s has contributed to substantial wage losses among workers who do not belong to a union.

Almost half (48 percent) of workers polled said they would vote to create a union in their workplace if they got the chance. But while so many workers want to join a union, the rates of the private sector unionized workforce continue to decline, in part, due to unlawful employers like VIUSA, who cheat the law to put corporate profits above working people’s paychecks.

Many employers also fight unionization efforts by hiring professional anti-union consultants to bust their employees’ organizing drives with sophisticated anti-union campaigns—sometimes spending hundreds of thousands of dollars to keep their employees from joining a union.

As shown in the table below, these anti-union tactics, in addition to aggressive lobbying campaigns to defund unions through deceptively-named “right-to-work” legislation, is part of the reason that private-sector unions are declining compared to their public-sector counterparts.

Private-sector unionization has declined as a direct result of anti-union policies: Union coverage rates by sector, 1973–2016

As the VIUSA case proves, the NLRB’s role in protecting workers rights is hugely important. But so far, Trump has nominated management-side attorneys like William Emmanuel and Peter Robb to fill critical roles at that agency. The Economic Policy Institute’s Policy Watch project is tracking actions by the Trump administration that affect working people and the economy—and so far, his administration has sided with corporations over workers at nearly every turn.

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EPI is an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States. EPI’s research helps policymakers, opinion leaders, advocates, journalists, and the public understand the bread-and-butter issues affecting ordinary Americans.